New Jersey Amends Its WARN Act to Extend Advance Notice and Require Severance Pay

The New Jersey “Millville Dallas Airmotive Plant Job Loss Notification Act” (“NJ WARN Act” or “Act”), which requires covered employers to provide employees (and designated state and local government officials) with advance notice of covered “mass layoffs,” the shutdown of an establishment, or transfers of operations, was recently amended to place more onerous obligations on New Jersey employers. Senate Bill 3170, which becomes effective July 19, 2020, requires employers to provide 90 days’ (instead of 60 days’) notice to affected employees. The Act also contains enhanced severance provisions, requiring employers to pay severance to all affected employees, even those who receive proper notice under the Act.

As a preliminary matter, many of the NJ WARN Act’s definitions have been amended, greatly expanding the Act’s reach. For example, “employer” is now more broadly defined to include “any individual, partnership, association, corporation, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee, and includes any person who, directly or indirectly, owns and operates the nominal employer, or owns a corporate subsidiary that, directly or indirectly, owns and operates the nominal employer or makes the decision responsible for the employment action that gives rise to a mass layoff subject to notification.” Under this expanded definition, the amended law imposes liability on individuals who are found to be involved in a violation of the Act. Also, the Act’s definition of “establishment” has expanded to include “a single location or a group of locations, including any facilities located” in New Jersey. Previously, facilities had to be across the street from each other, or from an office or industrial park to constitute an establishment.

The NJ WARN Act now applies to employers with at least 100 part-time and full-time employees, whereas in the past only full-time employees were counted in calculating the number of employees to trigger WARN obligations. The inclusion of part-time employees also applies to “mass layoffs” (triggering WARN obligations), which is now defined to include a reduction in force, resulting in the termination of employment of 50 or more part-time and full-time employees (during any 30 day period), at or reporting to an establishment, and the Act no longer requires that the number of employees terminated represents at least one third of the employees at the “establishment.” Thus, employers with various offices in the State—even if not close in proximity—will soon be subject to WARN notification requirements if terminating more than 50 employees—full-time or not.

Significantly, the NJ WARN Act provides that severance (equal to one week of pay for each full year of employment) be paid to affected (part- and full-time) employees “as compensation” for “back pay and losses associated with the termination of the employment relationship,” and is considered to be “earned in full” upon termination of the employment relationship. Prior to the amendment, severance was only paid if an employer failed to give proper notice. If an employer fails to comply with NJ WARN’s requisite 90-day notice, an employer must provide an affected employee with an additional four weeks of pay. Further, the right to severance cannot be waived unless such waiver has been approved by the Commissioner of Labor or court of competent jurisdiction. The Act, however, does not provide guidance as to the circumstances under which the Commissioner or court would waive an employee’s right to severance.

As previously mentioned, the amended law will take effect on July 19, 2020. In preparation, employers should begin to update their policies accordingly and carefully plan how to structure any future reductions in force, if possible, to avoid impact of the NJ WARN Act. In the event a reduction in force cannot be structured to avoid the law’s implications, employers may want to establish a reserve for any severance that will have to be paid in accordance with the amended Act.

If you have any questions regarding this blog, please feel free to contact an attorney in the Gibbons Employment & Labor Law Department.

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